Record-Free Gold Run Longest Since 28-Year Gap: Chart of the Day

By Nicholas Larkin -
Mar 25, 2013

Gold is suffering its longest run without a record high since the 28-year drought that began in 1980 and only ended in 2008 as the metal struggles to extend the longest bull market in at least nine decades.

The CHART OF THE DAY shows prices fell 16 percent from the all-time high of $1,921.15 an ounce set Sept. 6, 2011. The stretch since then is now longer than the period between highs from March 2008 to October 2009. The metal rose above $850 in January 2008 for the first time since the same month in 1980. Seven of 14 analyst estimates compiled by Bloomberg are for prices to average less this year than 2012’s record of $1,669.

Bullion as much as doubled after central banks, led by the Federal Reserve, cut interest rates in December 2008 to restore economic growth. Investors sold about 178 metric tons valued at $9.2 billion from gold-backed exchange-traded products since holdings peaked in December amid signs the U.S. economy is improving and as Fed policy makers debated the pace of stimulus. The metal, down 4.1 percent this year, is unlikely to return to the 2011 intraday record, Credit Suisse Group AG has said.

“It’s hurt sentiment, there’s no question about that,” said Adrian Day, who manages about $160 million of assets as the president of Adrian Day Asset Management in Annapolis, Maryland, referring to gold’s drop since 2011. “Once sentiment changes, you start to look at everything through a bearish prism. In terms of monetary stimulus and low interest rates, that’s still very positive.”

Gold has rebounded 3.3 percent since reaching a seven-month low of $1,555.55 on Feb. 21, partly on concern that Europe’s debt crisis may worsen. The Fed said March 20 that it will maintain asset purchases to spur growth. Gold has rallied the past 12 years.

At the same time, global equities are up 5.2 percent this year and the International Monetary Fund predicts global growth will climb to 3.5 percent in 2013 from 3.2 percent in 2012.